Enterprise Inns says it could raise up to £200m from property sales to cut debt

Pubs group identifies further asset sales as trading continues to improve

Enterprise Inns has jumped more than 7% after the debt-laden pub group issued a positive trading update and said it could raise £200m from asset sales this year.

The company said average income per pub was up 5% in the 18 weeks to the beginning of February, although the comparative trading period last year was hit by the snowy conditions which cost the company around £2m in lost profits.

It has sold most of its underperforming pubs and expects to raise £50m from disposals in the normal course of events. But it has identified a number of unwanted properties which could raise another £150m this year.

Its sale of 63 pubs so far this financial year means it has cut its borrowings from £446m to £420m.

Enterprise continued to call on the government to act to protect community pubs which it said provided valuable employment for young people. It said the duty escalator should be dropped, and steps should be taken to discourage supermarkets selling cheap alcohol.

Trading will continue to be tough, it said, but it hoped to benefit from continuing to improve its estate. Meanwhile it has appointed Robert Walker, currently at Travis Perkins, as its new chairman.

Enterprise has added 3p to 45.25p and analyst James Dawson at Charles Stanley said:

Previously, we have argued that the group’s estate valuation has been ahead of equity price valuations and we believe that this statement underlines this once more. The encouraging trading signs from the pubs do need to be viewed in the context of a more buoyant set of sector updates this year, as weather this year was milder. However, the group has managed to capture this performance and thereby the beneficial cash impact. We retain a buy with a speculative caveat attached.

But Paul Hickman at Peel Hunt was less impressed:

Enterprise has a long-term debt management task on its hands. Its immediate hurdle of refinancing bank facilities, expiring December 2013, has become more achievable on increased disposals. However, uncertainties on substantial longer-term repayments, and debt service in the meantime, must still be taken on board by any investor wanting to take a position. Despite the low PE, we still believe the risk profile is too great for most.